Brazil Auto Production, Exports Surge Driven by Argentine Demand

Brazil's automotive sector saw robust growth in July 2025, with new car sales rising by 14.2% and production reaching nearly 238,000 units, driven largely by surging demand from Argentina. The National Association of Automotive Vehicle Manufacturers (Anfavea) significantly revised its export forecast for 2025, now projecting a 38.4% increase, mainly due to Argentina's recovery and a 156.5% year-on-year jump in Brazilian vehicle shipments to its neighbor. While exports are helping offset weaker domestic sales caused by high local interest rates—currently at 15%, the highest in two decades—Brazil's overall economic growth is slowing, with inflation reaching 5.3% in July. Despite global uncertainties and tighter government spending, the labor market remains stable and automotive exports have become a key pillar of resilience for the economy. The wider industrial output in Brazil is showing only modest gains, but the automotive sector stands out as a success story amid challenging macroeconomic conditions. Argentina's own industrial output also surged in July, especially in vehicle production, further fueling cross-border trade.